December 19, 2024
By Our Correspondent
The government of Hong Kong has recently reaffirmed its dedication to the Organization for Economic Co-operation and Development’s (OECD) global forum focused on tax transparency and effective information exchange. In a significant step towards enhancing international tax transparency and addressing cross-border tax evasion, Hong Kong has committed to adopting the Crypto Asset Reporting Framework (CARF).
This initiative is a response to the swift evolution of the crypto asset market, which led the OECD to establish the reporting framework in June 2023 to uphold global tax transparency.
The CARF is designed as an extension of the existing Common Reporting Standard, facilitating the automatic exchange of financial account information related to tax issues. It creates a comparable mechanism for jurisdictions where users or controlling individuals of crypto assets are considered tax residents, allowing for the automatic annual exchange of tax-related information concerning crypto asset accounts and transactions.
The global forum has encouraged all jurisdictions with relevant crypto asset sectors, including Hong Kong, to adopt the CARF to promote equitable and effective global implementation. Hong Kong has pledged to implement the CARF in collaboration with appropriate partners on a reciprocal basis, contingent upon these partners adhering to the required standards for data confidentiality and security.
In light of the latest timeline established by the global forum, the Hong Kong government aims to finalize the necessary local legislative amendments by 2026. The inaugural automatic exchange of information under the CARF with pertinent tax jurisdictions is anticipated to begin in 2028.
